Between 2007 and 2014 the median worker’s wages and compensation declined, respectively, by 4.0 and 1.9 percent. Among the bottom 40 percent of workers there was an even greater decline in compensation than there was in wages, indicating that including benefits as well as wages in an analysis results in a more adverse trends

Hillary Clinton appropriately defines her economic policy goal as raising “incomes for hardworking Americans so they can afford a middle-class life” rather than “hitting some arbitrary growth target untethered to people’s lives and livelihoods.”

The reason to focus on the CEO pay of the largest firms is that they employ a large number of workers, are the leaders of the business community, and set the standards for pay in the executive pay market and probably in the nonprofit sector as well (e.g., hospitals, universities).

The chief executive officers of America’s largest firms earn three times more than they did 20 years ago and at least 10 times more than 30 years ago, big gains even relative to other very-high-wage earners.

I have been engaged in policy deliberations around trade adjustment for thirty-seven years. What was being considered in Congress today was a shell of the initial program and funded by cutting Medicare to boot.

A new paper, Firming up Inequality, has been receiving substantial attention in the media for its claim that wage inequality is not occurring within firms but only occurs between firms. Though the authors present valuable new data, which offers the possibility of great insights, their current analysis does not disprove that executive pay has fueled top 1 percent income growth. In fact, the study neither examines nor rebuts claims about executive pay.

EPI president Larry Mishel told NPR’s Scott Horsley of Morning Edition that “We have created lots of income, lots of output, lots of wealth over the last three decades, but the problem is it has not accrued to the vast majority.”
Watch the video

The current robot story is that employers are increasingly using machinery, computers or software instead of workers. Perhaps surprisingly to some, the data on investments and productivity cast doubt on any accelerated robot activity: the growth of labor productivity, capital investment and, particularly, investment in information equipment and software has strongly decelerated in the 2000s.

By every common benchmark, today's federal minimum wage is far below its 1968 value. Raising the federal minimum to $12.00 by 2020 would raise the purchasing power of the minimum wage modestly relative to where it was five decades ago.

This piece originally ran in The American Prospect.
We think of America as the land of opportunity, but the United States actually has low rates of upward mobility relative to other advanced nations, and there has been no improvement in decades.

Wage stagnation is not inevitable. It is the direct result of public policy choices on behalf of those with the most power and wealth that have suppressed wage growth for the vast majority in recent decades. Thus, because wage stagnation was caused by policy, it can be alleviated by policy.

Hidden amid all the discussion of when falling unemployment will lead to rising wages are the expectations shared in the media and among economic analysts that we can only expect wages to rise when unemployment is low.

EPI President Lawrence Mishel testified before the U.S. House Committee on Education and the Workforce on Wednesday, Feb 4,2015. In his testimony, Mishel said actions such as raising the minimum wage to $12.50 by 2020, strengthening collective bargaining, updating overtime rules, and ending forced arbitration would accelerate wage growth.

The fact that wage stagnation stems from intentional policy decisions means that fundamental economic forces did not make these trends inevitable. The income, wealth, and wages generated over the last generation were sufficient to provide broadly shared prosperity for all families. There will be substantial growth in income, wealth, and wages over the next few decades as well, and whether the vast majority appropriately benefits from this growth will depend entirely on the policy choices that will be made.

To understand the growth of income inequality—and the disappointing increases in workers’ wages and compensation as well as middle-class incomes—it is crucial to understand the divergence of pay and productivity.

Fed Chair Janet Yellen gave a speech this week, ”Perspectives on Inequality and Opportunity from the Survey of Consumer Finances”, and she deserves our applause for speaking some truths about social mobility and income inequality that are frequently overlooked.

Sign up to stay informed

Track EPI on Twitter

Economic Policy Institute

EPI is an independent, nonprofit think tank that researches the impact of economic trends and policies on working people in the United States. EPI’s research helps policymakers, opinion leaders, advocates, journalists, and the public understand the bread-and-butter issues affecting ordinary Americans.